Britain starts formal probe of currency manipulation

Britain’s financial regulator said it has started a formal investigation into whether a number of companies manipulated the foreign exchange market.

The Financial Conduct Authority decided to start the investigation after looking into accusations of market manipulation since June. The authority said it was working with other agencies in Britain and abroad to gather information about trading on the currency markets.

“Our investigations are at an early stage and it will be some time before we conclude whether there has been any misconduct which will lead to enforcement action," the agency said in a statement. It declined to give any more detail.

The Swiss Financial Market Supervisory Authority said this month that it was investigating several Swiss financial institutions in connection with possible manipulation of foreign exchange markets.

The investigations come after a far-reaching inquiry into the manipulation of another benchmark, the London interbank offered rate, or Libor. Last month, the British financial firm ICAP became the fourth institution to be fined by British and United States authorities in connection with the Libor investigation, bringing the total fines to about $US2.6 billion.

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Regulators have been looking into accusations that traders rigged the so-called WM/Reuters rates and other benchmark foreign exchange rates used by fund managers to calculate the value of their holdings and by index providers like the FTSE Group.

Foreign exchange is one of the biggest markets in the financial system, but because it is unregulated, any investigation would focus on individuals authorised by regulators and whether companies did enough to prevent any market abuse.